Is GST going to be a boon or bane for India?

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By the looks of it, GST will have to be considered a boon. GST is practiced across the world and has been in the wings for a long time. This itself is proof enough that GST had to be implemented sooner than later.

What has been under discussion for so long is the modalities under which GST will be rolled out. Like any path breaking change in the system, GST will also come with its own sets of pros and cons.

Also Read :-   What is GST..?

Pros

1. Uniformity in computing taxes for goods and service with elimination of multiple excise, CST, VAT, service tax calculations.
2. One % tax regime for both goods and service but, the exact % is yet to be decided
3. Appropriate allocation to Central and State funds
4. Accounting will be very simplified and consideration for input tax from raw materials will also become easy

Cons

1. VAT and Service tax on some products may be higher than the current levels. However, essential food items which were not taxed earlier in the VAT regime will continue to not be taxed, like basic food supplies.
2. Most of the developed economies use a single GST and not a dual GST. Hence, it will still be a very complicated billing and reconciliation IT machinery.
3. Since the mechanism is still complicated, it cannot completely eliminate black money and tax evasion.

What also needs to be noted is that such uniformity will lead to better monitoring of government taxes, which means that the government collections will be higher. This in turn means that with higher funds at their disposal, the state and center can spend more on public amenities, infrastructure, health, education etc.

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